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News March 31, 2021

PPP Extended Through May 31

Struggling promotional products firms have an additional two months to apply for a PPP loan.

By  Christopher Ruvo

Promotional products companies and other small businesses now have more time to apply for a loan through the Paycheck Protection Program (PPP).

On Tuesday, March 30, President Joe Biden signed into law the PPP Extension Act of 2021, which gives businesses until May 31 to apply for a PPP loan. The application period was set to expire on Wednesday, March 31.

The Extension Act also gives the U.S. Small Business Administration (SBA), which administers the program, an additional 30 days beyond May 31 to process applications. As of March 24, some 190,000 applications were stalled in the SBA’s PPP platform due to unresolved error codes related to anti-fraud checks the organization has instituted.

The Extension Act reached Biden’s desk after receiving overwhelming bipartisan support in Congress, with the Senate voting 92-7 in favor of it and the House of Representatives voting 415-3.

“It is a bipartisan accomplishment,” Biden said at the bill signing. “Without somebody signing this bill today, there are hundreds of thousands of people who could lose their jobs, and small family businesses that might close forever.”

You can learn how to apply for a PPP loan here. There’s also more on eligibility and loan forgiveness below.

The PPP is a federal program that allows businesses to receive low-interest loans – completely forgivable if certain parameters are met – to pay for payroll and other costs. The funding has aimed to save jobs and help keep small businesses afloat amid the economic ravages of the COVID-19 pandemic.

PPP launched as part of the $2.2 trillion CARES Act in spring 2020. Through March 28, 2021, 8,728,494 loans totaling more than $734 billion had been approved through the program, according to SBA data. Through several rounds of funding, the federal government has made nearly $1 trillion in PPP loans available.

Promotional products firms relied on PPP in 2020 to help them through periods when business had effectively disappeared amid COVID-driven shutdowns and related factors. Demand for PPP has continued to be strong in promo in 2021.

The PPP extension comes shortly after the SBA announced that it’s more than tripling the maximum amount small businesses and nonprofit organizations can borrow through its COVID Economic Injury Disaster Loan program. Starting the week of April 6, the SBA is raising the loan limit for the COVID-19 EIDL program from six months of economic injury with a maximum loan amount of $150,000, to up to 24 months of economic injury with a maximum loan amount of $500,000. The EIDL program is a separate initiative from the PPP.

In 2021 alone, the federal government has made more than $290 billion in PPP loans available.

For a first-time loan, businesses with 500 or fewer employees that are eligible for other SBA 7(a) loans qualify, as do nonprofits, churches, sole proprietors, independent contractors and eligible self-employed people.

Businesses that got a PPP loan in 2020 can apply for another loan, of up to $2 million, if they have 300 or fewer employees, will have used the full amount of their initial loan on eligible expenses by the time the second loan would be disbursed, and can demonstrate that they experienced a 25% or more gross revenue decline in 2020 as a whole compared to 2019 or in at least one quarter of 2020 compared to the same quarter the prior year.

To have a PPP loan fully forgiven, at least 60% of the loan must be put toward covering payroll. The money must be used within eight to 24 weeks.

Overall, costs eligible for forgiveness include payroll, utilities, rent and covered mortgage interest. New to PPP in 2021 are additional possible qualifying forgivable expenses. These include investments in worker protection and facility improvements that businesses made as a result of federal COVID-19 health and safety guidelines; PPE expenses are an eligible item here. A business that spends PPP funds to deal with damage incurred during the social unrest of 2020 – damage that wasn’t covered by insurance or other means – can use PPP money to cover the expense and have it forgiven.

Certain operating expenditures are also now eligible for forgiveness. These include business software or cloud computing necessary to a borrowers’ operations; costs tied to accounting/tracking of supplies, records and expenses; sales and billing functions; delivery of product or service; payment processing and tracking; and human resources.